Latest / Financial Survival Network / Outsourcing the CFO Role: Benefits for Small Businesses- Hurley Fox #6067

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Outsourcing the CFO Role: Benefits for Small Businesses- Hurley Fox #6067 · Financial Survival Network

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And so it's a CFO financial expert who works with in your company but on
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a part time basis and is not part of your company but is outsourced.
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You're listening to Carrie Lutz's Financial Survival Network where you get valuable information you just
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welcome. This is Financial Survival Network. I'm your host, Carrie Lutz and
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well, outsourcing big topic. A lot of things you think you could outsource.
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There's other things you wouldn't normally think you could outsource, like your CFO,
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but Hurley Fox is with us now, Eury, you specialize in being
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an outsource CFO. What is that exactly? So, an outsource CFO is
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a part time or full time position in your small business that is in charge
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of all things financial and accounting related and instead of it being in house.
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In house CFOs are fairly expensive and in the most small business cases not needed
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full time. And so it's a CFO financial expert who works with in your
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company, but on a part time basis and is not part of your company
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but is outsourced. Okay, so obviously you're not going to be there.
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How do you do that exactly? It sounds like it could be very complicated.
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It can be very complicated. We do it with a few different a
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few different ways. The first is, thankfully, technologies come a long way
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and most of our clon is accounting and data is all online anyway, So
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typically the accounting and financial data is all happy in the cloud so we can
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access it. And then when working with clients, we typically will have a
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resource in the company that is kind of our liaison to help us get information
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or understand kind of what's happening day to day. So it might be an
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office manager, it might be an accountant, it might be you know,
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somebody else who we have a relationship with that kind of gives us that boots
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on the ground presence but allows us to do all the work remotely. Okay,
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So well, you know, where do you find the biggest obstacle to
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people wanting to do this? Because obviously there could be a significant cost savings
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here, couldn't there? Yeah, And that's why typically you know, I
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talk about the value that we provide instead of just you know what the cost
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is. Some of the obstacles are as you've already mentioned, right, Well,
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hey, I feel like I should have somebody in person, and so
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that's a big obstacle. I will say that COVID really changed that quite dramatically
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in a pretty quick way. Prior to COVID, those conversations were a lot
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more difficult host COVID, and going through it, it was a lot easier
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to say, hey, look, we're not going to be there in person.
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So that's one. The second is most small businesses don't have the cleanest
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of the greatest accounting and so to get it from where it is before we
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start working with any company to where we want it to be as clean is
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a lot of work. And when most businesses and small business owners are just
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trying to keep getting sales and keep clients happy and deal with the day to
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day problems of their small business, it could be daunting to say, Wow,
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over the next couple of months, I'm gonna spend how much time trying
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to get my accounting correct or to learn about the financials of my company.
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And so to take that effort uh is daunting for some and and so they
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just keep pushing that down the road. I don't have time for it now.
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I'll get back to the accounting later. It's good enough, right,
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I've gotten by so far. I don't think you know. I'm good for
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now. And so those of you, the two biggest is just you know,
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shifting to we're not we're not an employee, we're not in person,
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we're not full time. And then it takes quite a bit of work up
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front to get the accounting to where we need to be. Mm hmm okay.
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And so what about the personnel at your clients to location. Obviously they've
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got to be trained, right, yeah, which is one thing when I
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started the company, I started working with more and more small businesses. I
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couldn't believe how few small businesses have anybody in their company who has any sort
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of accounting background or real knowledge. You know, typically they will have a
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bookkeeper who just kind of learned on the job, and so they know how
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to do the accounting for that business. But really they're just running through a
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checklist of here's what this should look like instead of what are the underlying principles
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that actually need to happen? And so we will we will either help train
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people that are there in kind of not only accounting, but proper accounting procedures.
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Right, how do you save files? How do you properly document things?
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How do you email? How do you you know, make sure that
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we can tie this, uh this number to kind of a primary source.
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Right. And then but if they if they either don't want to be trained
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or they don't have somebody to train, we will help uh the small businesses.
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Either we'll do the work internally and we'll say, okay, somebody somebody
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on our edge is going to do it and they're not there, or hey,
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we'll help you hire somebody and kind of vet candidates for you in terms
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of, hey, you know, getting getting a good accounting resource for you
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day to day, because it's just a how few small businesses have anybody in
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their company who is truly trained in accounting. Yeah, I believe it.
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I've had such things. And obviously so you want somebody who's maybe not an
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accountant or did some accounting, right, but but really you know kind of
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like in between you and them, and you obviously got to work for that
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work with that person, right yeah, yeah, yeah, you know,
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you know what's the like I've realized a lot of people who are doing the
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accounting for small businesses, they're like, they're like people who know how to
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play a song of the piano. Right, I've learned that one song and
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I know how the notes go, but I don't know how to read music
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and play. But I know how to play this one song. That is
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That is you know, typical in terms of how like the accounting is getting
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done for last small businesses. They know that this person is categorized like this,
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but they don't know why or they don know how it's getting you know,
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how it's hitting the books. But they know how to play the notes
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and that's getting them by. Yeah. Someone once told me you can teach
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a person, you know, you can teach a monkey how to play Mozart,
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but they don't really know that they're playing Mozart right, right right,
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They just hagg you away and the keys in the right order. Yeah,
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exactly, all right. So what are three things do you do to prepare
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to have a remote or virtual CFO. Well, we have a The process
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that we follow is first we on board, and by onboarding we mean we
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get your accounting correct. How do you know your accountant's correct. A good
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kind of quick measure to do this, and most small businesses don't satisfy this
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test is go to your balance sheet and you tie out every number on your
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balance sheet. If I tie out, I mean find another piece of paper
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that backs up that number. For example, if your balance sheet says you
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have one hundred thousand dollars in your bank, in your bank accal you should
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see a statement or a reconciliation statement that had that provides the backup for that
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one hundred thousand dollars. If you have an asset listed for fifty thousand dollars,
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where's the purchased document? If you have a liability worth the loan agreement
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and the loan and the loan documents, every number on the balance sheet should
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be able to tie out to a separate kind a piece of paper. If
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they all tie out and your balance sheet is accurate, correct, your accounting
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is going to be in a pretty good place. And so that's where we
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start, is, hey, go down the ballance sheet. Can we tie
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every number out? And then what we'll do is then we look at the
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profit and loss and we'll go through with the business owner because in some cases
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this is the first time the business owner will be going through the profit and
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loss in this way. Let's go down it does to the categorizations that you
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have make sense. Is there consistency at how you're doing their reporting? Should
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this really be a contractor or is it an employee or is it marketing?
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And then once we get that, then we can start comparing month over month
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to see, okay, is there any econsistencies our vendors booked kind of typically
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in the right place. And then once that's done, then we're at a
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really good spot to kind of work month to month and then working month to
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month. What we're doing is we're saying, okay, great, we got
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your accounting to a really good place, and we're checking to make sure your
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accounting is accurate each month. Because that was something that frustrated me early on
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as I would see business coaches and consultants working with business owners and I would
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ask them, well, you know, what do they say when they saw
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the accounting, and they the client would tell me, well, they the
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coach didn't look at the accounting. They're just helping me get in the right
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mindset or helped grow sales. And so it was always important to me before
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we give any sort of advice, is the accounting and the data correct before
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we give advice. And so then every month we're making sure the account is
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correct, and then we're saying, okay, great, now what can we
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do or what do we do with this data? So what are the next
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steps action items? So that's kind of a typical process on board using the
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you know, making sure the balance she ties out and the profit and loss
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is consistent and makes sense to the business owner, and that we're going every
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month making sure that it stays correct, but then also saying, okay,
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now what do we do with it? Got it all right? So hey,
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what kind of savings of your clients realized from using you as opposed to
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hiring their own CFO. Well, not only in terms of savings, but
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also the value we provide. I don't ever put this in in a contract,
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but typically clients will see at least we pay for ourselves within a year
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if not provided two to three x per turn. For example, if you
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pay US fifty to sixty thousand dollars a year, we will be able to
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save or help you burn at least sixty thousand dollars a year. If not
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one hundred and twenty one hundred and eighty. So that's typically what clients are
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seeing. We do this in a variety of ways. A most of our
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clients don't have or didn't have, full time CFOs, right because in the
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small business world, to pay for somebody at two to three hundred thousand dollars
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a year is difficult. But you need that person's knowledge and expertise to help
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drive your company forward. Right, So we can give you that knowledge and
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expertise at a set of two hundred and three hundred thousand dollars plus bonuses and
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payroll and all that. We can give it you at a fracture of the
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cost, but you're still getting the value at the level you need. And
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then what is that What is that value? How is that helping people?
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In some cases we're coming in with clients, we're saying, there's just a
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lot of money in the bank account. Well, in today's world, that
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should at least be in some sort of money market or ladder at CD earning
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them interest. How to manage and use debt is another you know, conversation
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that I have with a lot of clients where they weren't doing it correctly.
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Or the best way. But before we kind of got involved, understanding and
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help them learn that profit does not mean passion the bank. That was a
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question. You know, that's a question. I get a lot, I
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have no money in the bank. How could I possibly be paying taxes?
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Right, So, helping them understand that and then the number one thing in
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terms of helping business owners get a return on the investment that that they will
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pay the our company is focusing on cash flow to the owner, not cash
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flow to the employees, not profit, not revenue, cash flow to ownership.
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What is that number? Is it positive? If not, how do
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we make it positive? And then if it is positive, how do we
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how do we grow it? And then once we grow what are you doing
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with that free cash flow? Is it being used intentionally? Is there a
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purpose for it? Are you measuring the return on that investment? And so
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those are a couple of ways that be you know, help provide some value
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to small businesses. Okay, and all right, So you've got over one
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hundred and fifty clients to date we work with we work with one hundred and
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fifty businesses, if not two hundred on a monthly basis. Uh, there
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are of that one hundred and fifty businesses, there's thirty lions. And because
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typically you know, you don't really need our services if you're running a fairly
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simple business. But as businesses either grow or in our case, we work
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with businesses that are complex in the sense of their multi multiple entities and so
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to try to keep that organized and you know, have clear financials on businesses
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that you know, a hold a company that's ten businesses underneath of it is
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fairly complicated. So we have about thirty clients all across the country in every
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type of industry, and then in those thirty clients, there's one hundred and
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fifty to two hundred businesses that we do each month for them, right,
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and we yeah, got all right, Well, hey, it sounds like
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sounds like you're on the right path. And especially with technology being what it
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is. How often do you meet you conduct meetings with your clients to help
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them analyze the data that you compile. Yeah, a minimum is monthly.
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I saw some when I started. I saw other accounts or outsource CFO firms
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doing orly, and I just think that's too much time between. So the
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minimum we're meeting is monthly. As the client the bigger the client, where
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the more kind of the higher to the needs of the clients that increases in
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some cases is biweekly, weekly, and other cases I'm talking to clients every
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single day because they're either that complex or they're that big, and so we're
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touching base with them every day. All right, Hey, we want to
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find out more about you. We want to connect with you on the web.
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How do you do that? You can go to our website www dot
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Foxandpartners dot com fo x A n D Partners dot com, or you can
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look me up. Thankfully, there's not that many Hurly Foxes in the world,
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so just type it Hurley Fox and LinkedIn and you'll see me pop up
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and you can that would be all linked all right. Hey, well,
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we appreciate you coming on and got any questions for Hurley myself. Email kl
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at Carrie LUTs dot com. You'll find a link in the show that's to
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his site on Financial Survival Network dot com. Lease sign up for your free
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newsletter when you're there early. Wishing the best of luck and be well.
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Thanks so much for having me Carry, Thanks for listening to Carry Lenz's Financial
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Survival Network. Your solution to today's trying times for the latest go to Financial
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Survivalnetwork dot com. Financial Survival Network now more than ever,